Fiserv, Inc. Q4 FY2025 earnings call

Mike Lyons mentioned the quarter was a positive step in building the foundation. The company has a clear strategy, added senior talent, and is in execution mode on the One Fiserv plan. In the client-first pillar, targeted investments were made to align with client needs. For Clover, there was momentum in establishing it as the preeminent small business operating platform with vertical and horizontal progress. In innovation, progress was made on Commerce Hub, modernizing core banking and card issuer platforms, and exploring stablecoin and agentic commerce. Project Elevate is an enterprise-wide evaluation, and there is disciplined capital allocation.

Total company adjusted revenue in Q4 was $4.9 billion, flat, while full year adjusted revenue reached $19.8 billion, up 4%. Merchant Solutions saw organic revenue growth of 6% for the year, with 1% growth in Q4; Financial Solutions had 2% organic revenue growth for the year, and a 2% decline in Q4. For Merchant Solutions in Q4, organic revenue growth was 1% and adjusted revenue grew 2%. Small Business revenue had 2% organic growth in Q4 and 3% adjusted growth. Clover revenue grew 12% in Q4, 23% for the year. Financial Solutions Q4 adjusted operating income declined 20%, with full year adjusted operating income down 2%.

2026 organic revenue growth is expected in the range of 1% to 3%, with Merchant Solutions revenue growth in the mid-single digits and Financial Solutions flat to slightly down. Adjusted EPS is expected to be between $8 and $8.30. Adjusted operating margin is expected to be 31% - 32% in the first half of 2026 and 35% - 36% in the second half. Capital expenditures are expected to remain flat with 2025 levels, and the leverage ratio is expected to be approximately 3x, with free cash flow conversion around 90% of adjusted net income.

Q: Darrin Peller asked if the review accomplished everything needed and confidence in numbers going forward.

A: Mike Lyons said they feel great about the progress and it is in line with the preliminary view provided earlier.

Q: Timothy Chiodo asked about digital payments price changes and market impact.

A: Paul Todd said there were no new developments related to those price changes in Q4, and they were pleased with sequential improvement and volume growth in digital payments.

Q: Tien-Tsin Huang asked about structural vs onetime expenses.

A: Paul Todd said expenses are in line with expectations, and Project Elevate expenses have a certain cadence.

Q: David Koning asked about the SMB portion of the Acceptance segment.

A: Michael Lyons said non-Clover SMB is expected to have slight growth, and Argentina is not a significant growth factor.

Q: Andrew Jeffrey asked about Clover yield and value-added services.

A: Michael Lyons talked about Clover's priorities, and Paul Todd said yield maintenance is expected.

Q: Andrew Schmidt asked about the banking segment client retention and portfolio.

A: Michael Lyons talked about core modernization, client service investments, and the portfolio of solutions available.

Q: Jason Kupferberg asked about Clover improvement in December, January and lap of gateway conversion.

A: Michael Lyons said there was a macro anomaly in November, and volumes reaccelerated in December and January; Paul Todd said they feel good about where they stand.

Q: Dan Dolev asked if anything surprised him.

A: Michael Lyons said there were no new negative surprises, and the focus is on execution.

Q: William Nance asked about PayFac grow-over on the enterprise side.

A: Paul Todd said the impact of PayFac laps in the first quarter, and revenue and transactions are converging.

Q: Bryan Keane asked about merchant organic growth lift.

A: Paul Todd said mid-single-digit growth is expected, with Clover revenue growth in the low double digits.

Q: James Faucette asked about the Financial Solutions segment reacceleration.

A: Michael Lyons talked about client satisfaction, average revenue per client, and underlying volume growth.

Q: Kenneth Suchoski asked about non-Clover SMB growth in 2026.

A: Paul Todd said there is a strategic approach to non-Clover merchants.

Q: Harshita Rawat asked about Clover volume growth drivers and banking customer satisfaction.

A: Paul Todd talked about the core growth rate and deliberate conversion, and Michael Lyons said clients like what they see but want sustained delivery.